Physical vapor deposition techniques are presently being used to deposit elemental thin films or multicomponent thin films of novel materials like superconductors, oxides, dielectrics, etc. The microstructure development of these films, especially grain growth processes are particularly important for optimization of their electrical properties. In this paper, we focus on two critical issues related to microstructural evolution in thin films: (i) modeling of microstructural evolution during vapor deposition, and (ii) anisotropic grain growth during post deposition annealing in non-cubic systems. One of the key issues in non-cubic oxide systems, especially in high-Tc superconductors, is the anisotropic nature of growth which gives rise to oriented films on lattice mismatched or amorphous substrates. The factors affecting grain growth in non-cubic systems which lead to textured film are discussed in detail. An overview is also presented on the new developments in the modeling of materials synthesis by physical vapor deposition techniques. It is suggested that there is a strong need to formulate theoretical and computational methodologies which bridge both continuum and atomistic descriptions. The concept of “closed” and “open” thermodynamic systems to classify a broad range of microstructural evolution issues in the deposition of thin films is introduced.